Mojo - June 2011

Democrats and Republicans still need to hammer out a grand bargain to raise the debt ceiling and fund the government next year. But it seems increasingly likely that major budget cuts are going to be part of the mix, and Republicans sound bullish about what's to come. Nothing's official yet, but top Republicans claim the deal will include "a package of immediate and specific budget cuts; budget caps reaching out five years to reassure conservatives that tough budget decisions will be made in the future; Medicare reforms short of the House approach; no tax increases," according to the Washington Post's Michael Gerson.

Depending on the magnitude of these cuts, it could be a big win for the Republicans. And while party leaders have been hashing out the particulars behind closed doors, the GOP has already set the goal posts for where they'd like to start cutting back. On Thursday, the GOP-led House passed a bill, 217-203, that slashes money for needy mothers and children, among others. The AP reports:

A spending bill to fund the nation’s food and farm programs would cut the Women, Infants and Children program, which offers food aid and educational support for low-income mothers and their children, by $868 million, or 13 percent. An international food assistance program that provides emergency aid and agricultural development would drop by more than $450 million, one-third of the program’s budget.

According to anti-hunger advocates, the cuts to emergency food assistance alone would affect about 320,000 women and children, the Post's Lyndsey Layton reports. Layton also notes that the spending bill that passed also slashed $87 million from food safety inspections for meat, poultry, and dairy, which a House committee had first green-lighted last month.

The Democrat-controlled Senate will try to restore many of these cuts, but the House GOP has laid down the first marker. With major entitlement reform unlikely, the White House and congressional Democrats may be forced to acquiesce increasingly on these kinds of spending cuts to come to a deal.

Despite resurgent profits among the titans of finance, Wall Street is slimming down. As the New York Times' Dealbook reports today, heavyweights like Goldman Sachs and Bank of America are shaving operating costs and planning to lay off employees. Morgan Stanley, the Times says, could jettison at least 300 brokers and cut $1 billion in expenses not related to pay.

For the well-heeled denizens of big finance, that's bad news. For the rest of America, it could be cause for celebration.

Here's why. Over the past two decades, we've witnessed the "financialization" of America, in which Wall Street and the banking sector have gobbled up an ever-greater share of American wealth. As economist Henry Kaufman has noted, the ten largest financial institutions controlled 10 percent of financial assets in the US in 1990; by 2008, their control had grown to a whopping 60 percent. And when Princeton economics professor Hyun Song Shin studied the flow of cash in the American economy, he found that, between 1954 and 1980, nearly all sectors grew tenfold. That trend continued from 1980 to 2008, but with one major exception: the securities industry grew 100-fold, largely thanks to the deregulatory frenzy presided over by Reagan, Clinton, and Bush I and II. As my colleague Kevin Drum pointed out, by the mid-2000s financial industry profits had spiked to 40 percent of all corporate profits in America, while Wall Street pay had doubled and bonuses sextupled.

Drawn to that wealth were some of the brightest minds to graduate from America's top universities. The best engineers and scientists weren't necessarily designing solar panels or building the best electric cars; they were working as high-paid "quants," algorithm-writing mathematicians, and high-frequency traders on Wall Street. Granted, the flow of graduates to jobs in finance lessened during the recent financial crisis, but there's no doubt Wall Street remains an enticing and lucrative option for the best and brightest. As Harvard economist Benjamin Friedman lamented, "It's all the more troubling when I think that, after [students] leave us, so many of them go into activities that are not economically productive for the country, for society, even, just narrowly, for the economy."

So the news that Wall Street is trimming its ranks, whether prompted by the European debt crisis or the fear that aspects of the Dodd-Frank law might pinch the financial industry's profits, is perhaps an early sign of waning influence, a modest rolling back of the financialization trend. Maybe the coming years will see big finance relinquish some of its grip on American wealth while still doing the important work of allocating capital when needed. Or maybe it's a temporary blip, an aberration. Either way, with ordinary people still stinging from the pain of the financial crisis, it's obvious that an economy controlled by Wall Street is an economy that simply doesn't work for most Americans.

One week ago today, the MoJo DC bureau was consumed by the arrival of Sarah Palin's emails covering the first half of her half-term as Alaska's governor. As David Corn detailed, there were plenty of interesting discoveries—a less than chilly attitude toward climate change, for instance, and a sometimes obsessive attitude toward media critics (marginal and otherwise).

While we were poring over the documents, though, Michael McLaughlin of AOL's Weird News was taking a different approach:

AOL Weird News brought samples to two writing analysts who independently evaluated 24,000 pages of the former governor's emails. They came back in agreement that Palin composed her messages at an [8.5] level, an excellent score for a chief executive, they said...

"She's very concise. She gives clear orders. Her sentences and punctuations are logical," Payack said. "She has much more of a disciplined mind than she's given credit for."

Although it's like comparing apples to oranges, Payack said that famous speeches like Abraham Lincoln's Gettysburg Address was a 9.1 and Martin Luther King Jr.'s "I Have a Dream" oration rated a 8.8 on the scale.

Having read several thousand pages of the Palin emails, I think apples and oranges might be a bit of an understatement here. But there's also a bit of truth there: Palin's written communications are noticeably more coherent than her efforts to explain herself verbally (witness: Paul Revere-gate).

With Texas Gov. Rick Perry teaming up with the American Family Association (considered a hate group by the Southern Poverty Law Center) for a mega-event in Houston next August, the liberal watchdog group People for the American Way is out with a new report looking at one of the group's leading lights—issues director Bryan Fischer. Fischer, as we've previously noted, has used his radio show, Focal Point, and column to articulate a fiercely anti-gay agenda; he's called gays "Nazis" and advocated for the criminalization of homosexuality. (He shares the same disdain, incidentally, for grizzly bears and killer whales.) It's a pretty comprehensive report. Here's a sample:

"Hitler recruited around him homosexuals to make up his stormtroopers, they were his enforces, they were his thugs, and Hitler discovered that he could not get straight soldiers to be savage, and brutal, and vicious enough to carryout his orders, but that homosexual soldiers basically had no limits in the savagery and brutality they were willing to inflict on whoever Hitler sent them after. So he surrounded himself, virtually all of the stormtroopers, the brownshirts, were male homosexuals."

I would just add, riffing off of what Dave Weigel wrote earlier this week about Michele Bachmann, that it's important to understand Fischer isn't simply going off the rails when he says things like this. What makes him such a powerful advocate is that his message is actually steeped in loads and loads of research—not accurate research, mind you, but research nonetheless. Through books like The Pink Swastika, or the collected works of David Barton, there's a carefully crafted alternative historical narrative that give Fischer's incendiary views the illusion of legitimacy. The result is a remarkably potent and durable echo chamber, buttressed even further, as the report notes, by Fischer's cheery relationship with prominent conservatives like Michele Bachmann and Tim Pawlenty (both of whom have appeared on Focal Point).

The Wall Street Journal reports this morning that the nation's most powerful lobby when it comes to Social Security is changing its position. The AARP, which has long fought efforts to overhaul the entitlement program, is now willing to discuss reforming the system:

The decision, which AARP hasn't discussed publicly, came after a wrenching debate inside the organization. In 2005, the last time Social Security was debated, AARP led the effort to kill President George W. Bush's plan for partial privatization. AARP now has concluded that change is inevitable, and it wants to be at the table to try to minimize the pain.

"The ship was sailing. I wanted to be at the wheel when that happens," said John Rother, AARP's long-time policy chief and a prime mover behind its change of heart.

The shift, which has been vetted by AARP's board and is now the group's stance, could have a dramatic effect on the debate surrounding the future of the federal safety net, from pensions to health care, given the group's immense clout.

As the Journal notes, this is a very risky move. The obvious question is how the AARP's congressional allies, who have opposed entitlement reform, will react to the news. Not to mention the group's 37 million members. For the AARP, it remains to be seen what the real cost of a seat at the table will be.

Supplies designated for U.S. Army Soldiers from 6th Squadron, 4th Regiment, 3rd Brigade Combat Team, 1st Infantry Division, Task Force Duke fall from the sky after an air drop in Spera District, Khowst Province, May 14. The Soldiers had been isolated in a remote mountaintop area of eastern Afghanistan inaccessible to wheeled vehicles, while participating in Operation Maiwan III, a joint exercise with the Afghan National Army designed to eliminate insurgents and deny them safe havens along the Pakistan border. Photo by U.S. Army Staff Sgt. John Zumer, Task Force Duke Public Affairs Office

Based on findings by the state’s own court-appointed overseers, California Watch reports that "Juvenile inmates at California correctional facilities have been held in isolation nearly 24 hours straight on hundreds of occasions this year, in violation of state regulations."

An audit by the California Department of Corrections and Rehabilitation in March found multiple facilities operated by the Division of Juvenile Justice kept youth prisoners deemed a threat in their cells for all but 40 minutes a day. Auditors found Ventura Youth Correctional Facility, about 50 miles northwest of Los Angeles, to be the worst offender.

The juveniles placed on "temporary detention" or "temporary intervention plans" can be placed in solitary confinement for 21 hours a day.

Youth facilities exceeded that limit 249 times from January through April, according to numbers provided to Nancy Campbell, who is appointed by the state courts to oversee the juvenile facilities.

Keep in mind that California’s regulations actually permit juvenile prisoners to be isolated 21 out of 24 hours, yet the state’s facilities cannot manage to get teens out of their cells or rooms for even three hours a day. This despite the fact that a 2000 report by California’s Inspector General found that keeping juveniles in prolonged isolation can have a "profound" impact on their well-being. The problem, according to the audit, reflects the crisis in California’s adult prisons, as recently addressed by the Supreme Court: there are simply too many kids in juvie, with too few staff and resources to deal with them humanely.

Remember when Stephen Colbert was one of 16 Americans to accept the United Farm Worker's "Take Our Jobs" challenge back in 2010? Testifying before the House Judiciary Subcommittee on Immigration, Citizenship, and Border Security, Colbert championed the plight of the migrant worker and poked holes in the argument that immigrants steal jobs:

"The invisible hand of the market has moved over 84,000 acres of production and over 22,000 farm jobs to Mexico and shut down over a million acres of US farm land due to lack of available labor. Because apparently, even the invisble hand doesn't want to pick beans."

So much for poignant pathos. A recent survey conducted by the Georgia Agriculture Department discovered that despite the heavy reliance on migrant labor, there are still thousands of farm jobs available in the state: 230 producers reported that they need to fill 11,080 jobs this year. The glut of agro jobs in Georgia may have something to do with the anti-immigration bill, HB 87, that passed the state senate earlier this year. An Arizona-esque crackdown on the migrant workforce, the bill makes harboring illegal immigrants a crime and requires employers to check the immigration status of their new hires on a federal database called E-Verify.

Democrats have walloped the Republicans mercilessly for supporting Rep. Paul Ryan's plan to roll back Medicare. Republicans have shot back by accusing the Dems of having no ideas or plans to save the entitlement from insolvency. Now the Dems now seem determined to show the public that they can find ways to cut Medicare costs without jeopardizing the well-being of the nation's senior citizens.

On Thursday, House Democrats introduced a new bill that would reduce payments to drug companies for covering low-income Americans who are enrolled in the Medicare Part D program, which was passed in 2006 to subsidize drugs for seniors. The new bill, sponsored by Reps. Henry Waxman (D-Calif.), John Dingell (D-Mich.), and others, promises that it will "eliminate a sweetheart deal for brand-name drug manufacturers," according to a news release, allowing them to charge higher rates for patients enrolled in both Medicare and Medicaid. The House Dems explain why the drug prices the government pays went up—and why the GOP is responsible:

Prior to 2006, the government received substantial rebates on drugs used by "dual eligible" Medicare and Medicaid enrollees. However, beginning in 2006, the Republicans' Medicare Part D law eliminated these rebates, dramatically raising prices for the government and profits for manufacturers. The Part D deal resulted in a substantial drug manufacturer windfall. The bill eliminates the windfall and requires that manufacturers pay the rebates for dual eligible and low-income Part D enrollees, ensuring that taxpayers and the Medicare program do not overpay for Part D drugs.

In other words, the 2006 Medicare Part D deal gave Big Pharma a break by forcing the government to pay higher, Medicare-level payments for prescription drugs, and Democrats now want to eliminate that deal. House Dems claim their proposal would save more than $100 billion, citing an evaluation from the Congressional Budget Office. President Obama made similar noises about saving money by forcing drug companies to take the hit, proposing earlier this year that the government negotiate directly with drug companies to set prices for drugs under Medicare.

Neither proposal will be an easy sell. Drug companies were one of the few industry allies to stay on board with federal health reform—partly because they were able to fend off Democratic proposals that would slash Medicare drug payments. But Democrats are hoping that the new bill, which was also introduced in the Senate, will help cast them as both fiscally responsible and compassionate—and not just the new "Party of No."

"Instead of making devastating cuts to programs that help low-income and middle-income Americans, as Republicans keep putting on the table, we should do what every other industrialized country does and ask the pharmaceutical industry, one of the wealthiest in the world, to chip in," Rep. Pete Stark (D-Calif.), one of the bill's sponsors, said in the statement.

Two years ago, Mother Jonesreported that amateur historian Phil Mellinger had made an intriguing discovery about one of the great political mysteries of the 20th Century: the 18 ½ minute gap in the Watergate tape of the meeting in which President Richard Nixon first discussed the break-in with his chief of staff, H.R. "Bob" Haldeman.

After examining Haldmen's original handwritten notes of the meeting, Mellinger saw that these two pages contained little information corresponding to the erased portion of the Watergate tape. Which was odd, because Haldeman took copious notes of his sessions with Nixon. There seemed to be a gap in the notes that matched the gap in the tape. This suggested that pages of notes might have been removed. And Mellinger had an idea: a forensic procedure known as impressions analysis—under which a page is examined to determine what had been written on the preceding page—might determine if indeed pages had been removed and perhaps even reveal what had been written on them.

Mellinger raised this idea with the National Archives, which holds the Watergate papers and tapes, and officials there thought he was on to something. They initiated the process he had proposed, hoping that they could finally solve this mystery.

Two years later, on the 39th anniversary of the Watergate caper, the National Archives has revealed its findings in a nifty video. And...it did not answer this enduring question.

The CSIers retained by the Archives determined there is indented writing on the second page of the notes. It looks like a signature, but it is illegible. They also found that a date written on the top of the first page and the page number written on the top of the second page were written in different ink than the rest of the notes. The Archives declined to draw conclusions from this, but this could mean that the notes were tampered with and that a page number was written on the second page to cover up the removal of notes.

So the famous gap remains empty. And the Archives, which had previously explored using high-tech methods to recover audio from the tape, notes that in the future "additional work" may be able to be done on the tape itself. But for now, this central part of the Watergate cover-up is intact.

Here's the National Archives video. It shows all the procedures used to analyze the Haldeman notes. It was an impressive exercise.